Yesterday, the Commission accepted for public comment a
proposed consent agreement in this case. The evidence developed during the Commission's
investigation unequivocally demonstrates that, absent the proposed relief, the acquisition
by Nestle of Ralston would violate the antitrust laws and likely would result in harm to
consumers of dry cat food. The parties have agreed to divest Ralston's Meow Mix and Alley
Cat brands to J.W. Childs, a private equity investment firm. While I have concurred in the
Commission's decision, I write separately to express my concerns about some aspects of the
divestiture proposal.

The assets to be divested consist of two proven cat food
brands and little else. Standing alone, these brands do not constitute a complete, ongoing
business. Rather, J.W. Childs will have to create a new competitor largely from whole
cloth. In order to turn the divested assets into a viable business entity, J.W. Childs
will need to develop, among other things, its own research and development program,
manufacturing facilities, distribution system, and sales and marketing operations. Such a
prospect is daunting even when the purchaser is a participant in the same or a closely
related business - which is why divestitures of stand-alone businesses present the most
successful formula for restoring competition.(1)

The risk to consumers is further heightened where, as here,
the proposed purchaser is a financial buyer. When compared to dedicated industry
participants, investment firms may have quite different incentives and goals in operating
a business. For example, a financial buyer's business plan often involves selling the
acquired business within a relatively short period of time.

In the end, I am convinced that this is a rather unique
situation and that consumers will be adequately protected by the proposed relief.
Manufacturing and distribution in this industry segment is routinely and economically
contracted out through "co-packing" arrangements. Moreover, this particular
financial buyer, J.W. Childs, is financially strong, has a proven track record of good
management and growth of acquired firms, and has some experience in the pet industry with
its Hartz Mountain line of pet care products. These factors have led me to conclude that
J.W. Childs is very likely to restore lost competition and preserve choices for dry cat
food consumers.

I wish to make it clear, however, that I remain skeptical of
divestiture plans that require a purchaser to take brands alone, then build a competitive
company from scratch. In addition, I will closely examine divestiture proposals where the
buyer is a financial company. In most cases, I would prefer to see divested assets go to a
company with a stronger likelihood of operating the business for the long term.